Introduction The Internet is changing the way customers, suppliers, and companies interact to conduct business, communicate, and collaborate. It also changes the way we interact, learn, communicate and negotiate. At the same time, new consumer patterns are emerging due to the Internet and e-commerce. An increasing number of enterprises are using the Internet in order to get higher added value to their business and keep their competitiveness in the global market. More and more companies are trying to use the Internet to develop e-Strategies. Let’s look at the definition of e-strategies at first: E-Strategy prioritizes business initiatives and defines key performance indicators for developing e-business systems. [1] E-Strategy is “the use of Web-based applications and services to select and segment customers, develop and execute marketing campaigns, and distribute leads to the right sales channels.”1 E-Strategy “provides the broad framework for the transformation” from a business to an e-business. It provides vision, goals and objectives, and the map upon which a company can performs the transformation.1 All in all, e-Strategy is the use of the Internet, automated systems and email to develop methods for carrying out strategic initiatives and developing new markets or more business opportunities. 1 There are lots of important issues in building a successful e-Strategy. In this paper I will choose the following top ten issues to discuss: 1. Privacy 2. Security 3. Tax 4. Fraud 5. Globalization & Localization 6. Bricks-and-Clicks 7. Customer Relationship Management & Personalization 8. Value chain 9. Legal issue 10. Internet marketing Strategy 1. Privacy The issue of privacy is one of the most debated and hottest topics in the online environment and e-strategy today. Privacy not only affects consumers’ online confidence and trust, but also may cause potential legal and ethical problems. If consumers are not satisfied with e-privacy and businesses’ online practices, it is hard to imagine that e-commerce will have a prosperous future. In fact, according to a recent poll... Americans said they were more concerned about a loss of personal privacy online than they were about health care and crime. And according to research conducted for The DMA by Wirthlin Worldwide, nearly 60 percent of shoppers said legislation would be needed to make businesses observe good privacy policies. [2]The Internet industry is built on trust between businesses and their customers – and privacy is the number one ingredient in trust. Unless they effectively address the issue of privacy, Internet companies will lose the trust, and the business, of their customers. [3] The World Wide Web is an enormous easily accessible source of information and databases that provides easy access to a number of people, companies, agencies and many other sources. This brings about concerns about privacy on the Internet. Consumer privacy has received substantial attention as we move into the new age of online business environment. The growth of the Internet has developed many new concerns for the future about protecting the privacy of the consumers. New technologies, increasing data collection, changing market trends and the new global market place for e-commerce are contributing to the increasingly important role of information in the global economy. As such information particularly has become a valuable commodity that can bring jobs, businesses and customer services. Hence, these factors have created a mounting pressure to collect, hold, process and use personal data, more than before. These factors also have reduced the level of privacy and consumer confidence is lacking in such environment. [4] In some cases, the companies’ failure to disclose the basic technology and data-gather characteristics of their websites has become the focus of major concerns. The users feel that the website providers are being “sneaky” in gathering the data behind the scenes without informing them of what is going on. For the companies involved, this suggestion that they are involved in such practices of surveillance and unauthorized purposes can create a serious reputation issue and discourage web users from visiting their sites. For future solutions to these concerns regarding marketing and privacy issues, several technical strategies have been developed to help prevent or guard against not knowing or identifying websites and users called data magnets. They include cookies, web beacons (or web bugs, which are inserted in the software code of websites and commercial emails to track visits and movements and build profiles), data aggregation (collection of personal email addresses and transmission of third party sales or marketing), personalization and software downloads and data sharing between community sites. All these strategies have given rise to the protection of privacy issues for the future of e-commerce. We must determine at what level or beyond to proceed on this course for the protection of consumer privacy in our new world of online technology. As online users, we need to look for the “privacy policy” of the online services. Most Internet Service Providers (ISP) has adopted privacy policies that they post on their web sites and other user documentation. When you surf the web, look for the privacy policies posted on the web sites you visit. Also, look for the privacy “seal” such as TRUSTe or BBBOnline. If you are not satisfied with the policy, or if there is no policy or seal logo posted, you should avoid using the site. Consumers have several choices that are available to them in helping to protect their own privacy when using or conducting on-line activity. They can choose to opt-out of subscriber or data gathering information segments while on-line. Many websites will offer domain registration or semi-private activities or services that you can click on to accept or decline giving any additional information or continuing to proceeds through the offered services during a transaction or use of the website. The customer or consumer can choose to leave or back out of the site. The future is uncertain as to the laws and governmental legislation concerning the privacy and the Internet. There is great debate in several states now concerning the issues of privacy on the World Wide Web. Some states have already adopted laws and are trying to pass legislation to adapt to the new technology of the Internet and web users. Such states include Utah, where they have passed laws concerning digital signature laws. This law created opportunities for banks and other institutions to act as the repositories of digital signatures allowing individuals and businesses to send and receive confidential information over the web, as well as conduct binding contractual business transactions. 2. Security The growth of e-commerce has created the potential for new risks and abuses. Customers routinely buy products, trade investments, and bank online using personal information such as credit card, Social Security, and account numbers. A December 1999 study by Meridien Research found that online credit card fraud cost merchants more than $400 million per year. Meridien estimates this could rise to $60 billion annually by 2005. [5]After nearly a millennium of paper-based, pen-signed commercial transactions, e-commerce is revolutionizing the pace of business and generating enormous convenience, cost savings and productivity gains. Moving to an electronic transactions model offers spectacular cost benefits, especially in the financial industry. However, it does raise concerns about security, which must be soundly addressed to assure corporate immunity to some of the hazards that are inherent in e-commerce. [6]- Profiling the assets and identifying who needs access, then determining what level or tier of security is appropriate
- Identifying the level of risk that the company is willing to take and managing the security strategy based on the risk assessment
- Actively governing the strategy with effective policies and procedures that reflect the company's business strategy and accommodate external drivers such as international standards and e-business guidelines
- Revisiting the strategy as technology and business environment dynamics evolve.
3. Tax E-commerce creates some challenges to tax systems that were designed with a traditional retail model. There are several key reasons why e-commerce raises tax issues. The first one is location. Existing tax systems tend to determine tax consequences based on where the taxpayer is physically located. The e-commerce model enables businesses to operate with very few physical locations. An online vendor can easily sell to customers throughout the world from a single physical location. The second reason is Nature of Products. E-commerce allows for some types of products, such as newspapers and music CDs, to be delivered in digitized (intangible) form, rather than in tangible form. Digitized products raise issues at the state level as to whether sales tax applies and in which state income is generated for state income tax purposes. Thirdly, the Internet has allowed for New Marketing Techniques of selling and buying goods and services. For example, individuals can offer their unwanted items to a worldwide group of potential buyers via auction sites, such as E-Bay. When buyers interact directly with a foreign manufacturer, rather than a domestic retailer, the excise tax may go uncollected. Fourthly, Some of the New Assets created by commercial use of the Internet are domain names (URLs) and web sites. For income tax purposes, issues exist as to how to treat the costs of creating or acquiring such assets, as well as the characterization of any gain or loss generated upon disposition of the asset. Sellers of such assets may face uncertainty in the law as to how to characterize the gain or loss generated from the disposition (capital or ordinary). Fifthly, The Remote Workforce of an Internet company may be scattered throughout a state or country, rather than working in a single work location together. This can raise issues as to whether the presence of the employee in a particular state creates tax obligations for the employer in that state. At last, because of the Nature of Transactions, the Internet allows for paperless transactions and the potential for the use of electronic cash. This raises administrative concerns for the Internal Revenue Service as to whether transactions were properly reported, whether an audit trail exists, and whether new reporting rules are needed. [10] In order to tax e-commerce correctly, several strategies can be adopted as follows: [13]1. The tax rules should clearly specify when the tax is to be paid, how it is to be paid, and how the amount to be paid is to be determined. Lack of certainty in the tax system reduces the confidence taxpayers. 2. A tax should be due at a time that is most convenient for the taxpayer. 3. The costs to collect a tax should be kept to a minimum for both the government and taxpayers. 4. The tax law should be simple so that taxpayers can understand the rules and comply with them correctly and in a cost-efficient manner. 5. The effect of the tax law on a taxpayer’s decisions as to how to carry out a particular transaction or whether to engage in a transaction should be kept to a minimum. 6. The tax system should not impede or reduce the productive capacity of the economy. 7. Taxpayers should know that a tax exists and how and when it is imposed upon them and others. 8. The tax system should enable the government to determine how much tax revenue will likely be collected and when. 4. Fraud When the Internet was booming, more and more concerns are raised about consumer safety and the possibility of their credit card numbers being stolen during the online purchasing process. Consumer’s fear of online fraud has long been the bane of e-commerce, which holds back retailers placing an ever-increasing emphasis on web trading. Before the Internet, credit card fraud was limited by opportunity. Thieves could take only as many numbers as they could find on new cards mailed to home mailboxes, billing statements, or carbon receipts in checkout-counter wastebaskets. Sorting through a cardholder's trash or raiding mail costs lots of labor work. With the growth of online shopping, illegal access to card numbers has happened quickly. If the database that stores thousands of credit card numbers is poorly protected, it can be caught easily. American Express conceived the idea for the Fraud Prevention Network in early 2000 and was quickly joined by other industry leaders, all of whom have made security a top priority and are committed to making the World Wide Web a safer place for businesses and consumers. One of the group’s key strategies will be to share fraud prevention information and best practices with merchants of all sizes in order to improve Web security and decrease the costs associated with fraud. Merchants often bear the cost of fraud when stolen cards are used to purchase goods at their site. The Worldwide E-commerce Fraud Prevention Network will conduct a number of activities to promote increased security. The coalition released five recommended tips for e-commerce fraud prevention: [16]- Using real-time authorization from credit card companies
- This ensures that the credit card has not been lost or stolen and is a valid credit card number.
- Employing address verification systems
- Address verification systems match the billing address provided by the customer with the billing address on file with the card company.
- Using credit card verification codes
- Merchants should ask for the non-embossed code that American Express and other credit card companies put on their cards.
- Purchasing rule-based detection software
- Using detection software, merchants can screen each transaction to see whether it meets certain pre-defined criteria.
- Using predictive statistical models to create profiles of what typical fraudulent transactions look like
- This software culls data from large, historical databases to create a profile of what typical fraudulent transactions look like.
5. Globalization & Localization G&L is the one of the key issues of e-commerce. If a company wants to sell seriously to foreign marketplaces, it will have to localize the web site. Without G&L, sales will be minimal. More worryingly, returns are very high because of misunderstanding by people who are purchasing in a foreign language. Having discussing the importance of G&L, I will introduce several web globalization strategies as follows: - Web Strategy Evaluation and Technology Audit
- Internationalization Consultation and Implementation
- Localization and Maintenance
- Testing
The Evaluation and Audit is an important starting point that will lay the foundation for the globalized site. At its core is the comprehensive inventory of all platforms, applications, databases, code, scripts, and third-party tools that will be conducted in order to assess their readiness. The goal of the second phase is to internationalize the site and create a technologically, linguistically and culturally neutral platform from which to launch global e-Commerce initiatives, and incorporate local content and functionality. It covers as well as foreign language searching, sorting and parsing technology requirements. Once the scope of the effort is determined, the service provider works with its teams of internationalization engineers, Web designers and localization experts to effect the necessary changes. After a testing is loaded, a good OOBE (out of browser experience) is much more than just fast response time from servers. Once you hang your URL out on the Web, you've welcomed in users from around the world, each with varying degrees of English language proficiency. Does it matter how fast a page is served up, if that page is in English and the Web user's native language is French? Or perhaps, the page is promptly served up in the French language, but contains numerous errors in translation, cosmetic display, font usage, and cultural appropriateness. These common situations are guaranteed to detract from the browser experience. 196. Bricks-and-Clicks Although e-commerce has turned retailing on its head, it must integrate e-business with its existing business and customer base. The bricks-and-clicks approach is the most effective and economic. This combines offline resources, such as store brands, channels with and online e-commerce presence. The other option – a pure dot-com company – is now rare. Consumers are looking for brands that they know and trust. They also like the fact that a business has a physical presence, a place where they can go if something goes wrong. Pure dot-coms found that they had to spend a lot of money on marketing just to maintain awareness. Another example is about American automaker business. [22] It stresses that Internet was never intended to completely replace traditional American commerce. The auto industry is about as traditional as commerce can be. Consumers use the Internet to figure out what to buy, but when it comes time to make the deal, a test drive, tire-kicking and price haggling still rule. Meanwhile, behind the scenes, automakers' efforts to establish strong supply chains and delivery mechanisms via business-to-business initiatives appear to be holding their own. Some auto companies, like FordDirect.com and Ford Motor Company, allows a consumer to "build" a vehicle by selecting colors, options, etc., and then search by zip code for the desired vehicle at local dealerships. By adding to the convenience of shopping online, automakers offer features such as calculators that allow consumers to determine what they can afford and what their payments might be. Information on financing options is also available. Next, let’s look at the standards to determine the degree of the integration between the virtual and physical operation (bricks-and-clicks). The following 4 business dimensions should be evaluated: [23] 1. Brand · The choice to integrate brands or keep them separate is largely a choice between trust and flexibility. Extending a company’s current brand to the Internet gives instant credibility to a web site. 2. Management · There are two choice for the management: Integrate or separate. An integrated team can better align strategic objectives, find and exploit synergies, and share knowledge. Separate teams can focus more sharply, innovative more freely. Because each approach has its advantages, companies may choose to adopt one according to their own business model. 3. Operation · Decisions about integrating operations should be based on the strength of a company’s existing distribution and information systems and their transferability to the Internet. Integration can provide significant cost savings, a more compelling and informative site, and a competitive advantage over pure dot-com competitors. 4. Equity · Of all the integration decisions, this one is the most important. Integration allows the parent to capture the entire value of its Internet business. Separation can help attract and retain talented managers and provide access to outside capital. 7. Customer Relationship Management & Personalization The Internet offers many opportunities for a better understanding of customer’s behavior and for developing a closer relationship with them. Customer relationship management (CRM) and personalization systems allow for the collection and application of comprehensive information to create a more customized environment for the consumer. While the potential for such systems is substantial, they are complex and difficult to implement, and if not professionally managed, can lead to the abuse of consumer privacy. CRM is based on the concept that every interaction with the customer or partner is part of a larger relationship management process. The quality of that relationship must be maintained in order to best achieve enterprise goals. [24] Right now CRM is the hottest topic of e-commerce environment. It focuses on the retention of customer by collecting all data from every interaction that every customer makes with a company from all access points whether they are phone, mail, web or field. The company can then use this data for specific business purposes, and at the same time, Marketing, Service, Support or Sales are concentrating on a customer-centric approach rather than a product-centric. A successful CRM implementation include 6 critical phases as below: [25]1. Researching problems and identifying objectives 2. Establishing and communication customer-centric strategy 3. Planning and making preparations 4. Redesigning work processes and consolidating corporate resources 5. Choosing the right software and CRM solution 6. Finalizing and continuously improving One important aspect of CRM is personalization. Personalization is critical to helping suppliers use CRM technologies to find more customers, keep them, and give them better service than before. It is all about providing information that reflects what you know about a certain customer--and what you know is changing all the time. Basic personalization starts with simply using his or her name on a Web page. But the name game is no longer enough. When customers contact you, you gain their appreciation by having the answers they want. The traditional value chain describes the flow of information starting with the supplier and ending with the customer. It does not describe the true relationships between a company engaging in e-commerce, its customers and its suppliers. Companies would want to share information with their customers and suppliers in varying stages of the value chain. As the Internet allows the creation of electronic networks that link buyers and sellers in the value chain with greater ease and efficiency, roles in the value chain also change. Now, the customer is at the center of the value chain and the information system and CRM system link the customer to all the phases of processes. Value Chain management is an important aspect because if implemented successfully, it entails establishing the client’s requirements in order to provide the best possible solution and achieve value for money. The key to reconfiguring business models for the knowledge economy lies in understanding the new currencies of value. There are three currencies of value as follows: [29] 1. Goods, Services, and Revenue (GSR). Exchanges for services or goods, including all transactions involving contracts and invoices, return receipt of orders, requests for proposals, confirmations, or payment. Knowledge products or services that generate revenue or are expected as part of service (such as reports or package inserts) are part of the flow of goods, services, and revenue. 2. Knowledge. Exchanges of strategic information, planning knowledge, process knowledge, technical knowhow, collaborative design, policy development, etc., which flow around and support the core product and service value chain. 3. Intangible benefits. Exchanges of value and benefits that go beyond the actual service and that are not accounted for in traditional financial measures, such as a sense of community, customer loyalty, image enhancement, or co-branding opportunities. These value exchanges lie at the heart of a value network. Further, every exchange of value is supported by some mechanism or medium that enables the transaction to take place. Regardless of whether business-to-customer or business-to-business e-business is considered, both require a value chain focus. Both business-to-customer and business-to-business e-commerce strategies require integrating processes and application systems with several suppliers and many customers. There are a few benefits of integrating the value chain. It allows you to extend your services further down the value chain to better manage the process or further up the value chain to own the customers total experience. What does this mean to business? Integrating processes and applications which are part of the value chain, can lead to increases in revenue, higher customer satisfaction, new opportunities to offer packaged products/services, fewer defects, and many more benefits. It allows your business to remove non-value added steps in the process and reduce waste and/or cycle time in the process which equates into bottom line dollar savings for your business. [30] 9. Legal issue E-commerce has been a big success already, but challenges still lie ahead. Among these challenges, Legal issue is being highlighted. First of all, copyright and patent are the main e-commerce-related issues over which companies would seek legal advice. These issues are mainly happened when Internet network is used. The duty of a network administrator to prevent notified abuses of copyrights has already extended to blocking propagation of newsgroup articles, using technical means to reduce the incidence of such abuse. Originally, a patent prohibits others from using the invention in the U.S. But the spread of e-commerce patents has raised questions about if the limits should be imposed. For example, Amazon may adopt some methods to protect its patent, and one of the method is to drive sales by placing information about related products into context in a Web page, based on customers' surfing behavior, similarly to the way it already refers book buyers to additional titles purchased by other shoppers. [31]Secondly, legal issue includes the determination of the jurisdiction of an e-commerce transaction. This is a complicated and evolving issue. A company should consider that selling products through its web site will increase the number of states and countries that will be able to successfully assert jurisdiction over its activities. If the e-commerce businessperson in the U.S. does not carefully craft the terms-of-use statement, they might land in a foreign court, defending themselves in a jurisdiction that might not have the due process and equal protection concerns that U.S. courts observe. [32] Thirdly, legal issue in electronic transactions has to do with contract negotiation. This is particularly important in dynamic B2B market places. Whether for an e-tailer, a B2B enterprise or a provider of on-line services, the contracts consummated on-line must be enforceable. Without this assurance, e-commerce simply isn't viable. In the future, it may be increasingly common to ensure the enforceability of online contracts through the use of digital signature technology. It is an encryption technology that verifies the integrity of the document and authenticity of the sender. [33] Fourthly, when collecting information from purchasers or other users of a company’s web site, it is important to consider whether any privacy laws and regulations are applicable to the collection and use of such data. This will depend on the country of the individual who supplies the data. The failure to consider these issues may result in difficulties conducting business with individuals, especially in Europe. Many European countries have a much more comprehensive and protective approach to privacy issues than the United States has. [34] Finally, the growth of Internet commerce requires that a company carefully review its trademark strategy to determine whether it needs to seek additional trademark registrations by virtue of doing business on the World Wide Web. This is because the Patent and Trademark Office may categorize the appropriate goods and services classifications for a trademark differently, depending on whether the applicable product or service is made available over the Internet. For example, Roland Vogl, a trademark lawyer agrees that AOL has an immediate interest in protecting its brand. "AOL must protect the payers of their fees," he told the E-Commerce Times. "If there is another ISP that establishes itself as tough on spammers, AOL could lose customers. [35] 10. Internet Marketing Strategy A very important activity of the e-commerce initiative is its marketing and promotion. Opening up an e-commerce web site is rather like setting up shop at a place at which nobody knows. It is not enough just to register with search engines. Instead, it is necessary to have an aggressive marketing campaign to make the target market aware of what the company has to offer. Based on the articles in E-commerce Times, I summarize 2 important e-commerce Marketing strategies as follows: 1. Online Advertising Targeting the right people at the right time is a key strategy in increasing sales and opening markets.
Investing money in advertising campaigns and banners can successfully build a business if targeted correctly. The best Internet marketing strategy involves targeting markets where potential buyers surf the net. For example, Google and one of its partners - Amazon.com have tied the knot in a deal designed to expand Google's advertising presence and give Amazon.com users greater access to products not listed on the e-tailer's site. For Google advertisers, it means access to a large amount of new traffic in the form of users who browse the Amazon site. [36] 2. Website Promotion A successful marketing strategy aims at targeting potential clients and customers who are offline as well as online. Website promotion can take many forms. An interesting email proposal or newsletters are also ways of achieving top results and rankings. However, consumers may be tired of receiving lots of email every day. In this situation, email promotion is not helpful for consumers to make decision. Successful marketers have to refine their e-mail blasts to a point at which recipients are not only willing, but also happy, to receive their missives. According to Regan’s article: “Building a Better E-Mail Blast” in E-Commerce Times, savvy online marketers say a few basic ingredients can create e-mail campaigns that succeed every time as follows: [37]The first is permission, which can be obtained indirectly by purchasing e-mail marketing lists that consumers at some point agreed to be part of. However, it is far better to obtain permission directly. The second vital ingredient is relevance: Spam is, by definition, a message that someone does not want to receive, regardless of who sent it. Another key is to think of e-mail marketing campaigns not as blasts or even batches, but as one-on-one communications between a brand and each individual consumer. Analysts recommend that a company always begin by evaluating whether its message is important enough to warrant taking some of a consumer's valuable time. Some typical promotion includes free shipping or discount. · Free shipping Amazon.com is one of the prominent e-companies to offer free shipping. It announced it will make its free shipping offer, which applies to most orders of more than $25, permanent after an experiment that lasted well over a year. [38] · Discount In last month, AOL, together with largest retailers, including 1-800-Flowers.com, Banana Republic, Blue Nile, Discovery Store, Electronic Arts, Godiva, Hewlett-Packard, JC Penney, Neiman Marcus, RedEnvelope and ShopNBC, launched a one-day discount sale. It resulted in at least a tenfold traffic spike for most of the 32 sites involved. There were some web site promotions on that day. Whenever a customer jumped from AOL to a retailer's site, welcome messages popped up, informing the shopper of special sale items and the amount of time left until certain offers expired. [39] Conclusion Having said the top ten issue of e-commerce strategy, I will make a conclusion of this paper. With the emergence of e-commerce, consumers get lots of advantages as follows: · Convenience and Ease of Use. Consumers can purchase the product they want at any time and from any location, by using an Internet connection. · Variety and Larger Selections. Consumers can compare and contrast more products more quickly. · Without Sales Pressure. Customers who dislike salesmen can avoid the experience altogether. Internet shopping makes it easy to go offline to think about a purchase. · Quickly gain of detail information. Customers can get detail information about the product itself and the vendor. · Easy comparison of price. Customers can compare the price of the same product with several vendors easily. Consumers are able to research a product and its competitors more thoroughly before purchase and compare many prices from different retailers. · Personalization. Companies can target every customer individually. However, nothing is perfect. When we go back to look at these issues like privacy, security, fraud and legal violations, we can see that there are still some disadvantages remaining as below: - Worry about non-arrival shipment
- Lack of confidence in secure personal information transfer on-line
- Ease of fraudulent retailers and sites
- Small shops will lose utility and disappear
- Lose the traditional shopping experience and the instant satisfaction that many really enjoy
- Consumers in some countries lack of computer knowledge to get benefit from e-commerce
Finally, let’s look at the future trend of e-commerce. There are some common Internet tends that are overall stats: [40] · Foreign users are generally young, well educated and often male. · Education is a key factor in Internet usage. · Cyber cafés and public access boost usage worldwide. · With liberalization and privatization - competition increases and technology improves. , , , · The middle class worldwide is increasingly going online. · E-commerce is becoming increasingly popular worldwide. · The Internet is recognized as a mass medium. · New demographics are being created, as not only white-collars go online. May 13, 2003 from http://www.cob.sjsu.edu/facstaff/nellen_a/BoaltUT6-01.pdf http://www.crm-guide.net/redirect.asp?url=http://www.vmsc.com/EBusiness.htm
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